Cummins Inc. Reports Solid 2003 Second Quarter Earnings; Filtration and International Distributor Businesses Post Record Quarters; Engine Business Shows Significant Improvement.Business Editors COLUMBUS Columbus. 1 City (1990 pop. 178,681), seat of Muscogee co., W Ga., at the head of navigation on the Chattahoochee River; settled and inc. 1828 on the site of a Creek village. , Ind IND Investigational new drug Therapeutics A status assigned by the FDA to a drug before allowing its use in humans, exempting it from premarketing approval requirements so that experimental clinical trials may be conducted. See Phase 1.2, 3 studies, Sponsorship. .--(BUSINESS WIRE)--July 25, 2003 Cummins This article is about the diesel engine manufacturer. For other uses, see Cummins (disambiguation). Cummins Inc. (NYSE: CMI) is a maker of diesel and natural gas engines whose corporate headquarters is located in Columbus, Indiana. Inc. (NYSE NYSE See: New York Stock Exchange :CUM) today reported second quarter earnings of $.34 per share, or $14 million profit after taxes, on sales of $1.54 billion. The stronger than expected earnings reflect record performance by the International Distributor and Filtration filtration: see sewerage; water supply. Filtration The separation of solid particles from a fluidsolids suspension of which they are a part by passage of most of the fluid through a septum or membrane that retains most of the solids and Other Businesses. The quarter also represents significant improvement in the Engine Business, particularly due to increased sales in the Dodge Ram
The Ram is a full-size pickup truck from Chrysler LLC's Dodge brand. The name was first used in 1981 on the redesigned Ram and Power Ram, though it came from the hood ornament used on truck and a rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective in sales in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. heavy-duty heav·y-dut·y adj. Made to withstand hard use or wear. heavy-duty Adjective made to withstand hard wear, bad weather, etc. Adj. 1. truck market. The performance in these three businesses bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. profits significantly and the Power Generation Business moved closer to breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations while absorbing $5 million of restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs. "We believe this quarter's results demonstrate that we are well positioned for the market upturn. Three of our four businesses are performing well, and the fourth business has taken necessary actions to return to profitability," said Tim Solso, Chairman and Chief Executive Officer. "We are delivering the right products to the market for our customers. We are generating positive cash flow, while funding important product development programs. We remain committed to paying an attractive dividend to our shareholders and providing a good return to all our stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. . We will continue to tightly manage spending and believe we will benefit strongly as our markets continue to recover." Engine Business Total sales for the Engine Business in the second quarter were $889 million, a 5 percent increase from sales of $850 million a year ago. Revenues in automotive markets were 6 percent higher than the second quarter of 2002, with increases in our light-duty adj. 1. not designed for heavy or demanding work; as, a light-duty detergent s>. Opposite of heavy-duty nt>. Adj. 1. light-duty - not designed for heavy work; "a light-duty detergent" automotive business more than offsetting sales declines in medium-duty truck and bus engines. Overall revenue from Industrial markets was up 2 percent year-over-year, with increases in mining and government markets and decreases in revenues from rail and marine engines. The Engine Business continues to benefit from the successful launch of our complete line of emission-compliant engines. There are now more than 16,000 of the new ISX ISX InstallShield Express (Setup software) ISX Internet Service Exchange (Abovenet) ISX Insoluble Starch Xanthate ISX Information Superiority Experiments ISX Infrastructure ISX Incisive Software Extensions and ISM See ISM band. heavy-duty engines in the field, with almost 450 million miles of service accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. . By October October: see month. , the Company expects to have more than 25,000 engines in service, with close to one billion miles of reliable performance. The award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" Cummins Turbo Diesel engine made for the Dodge Ram truck continues to perform very well and has strong market acceptance. Engine sales volume for the Dodge Ram over the last three quarters creates a new shipment record for Cummins. For the second consecutive year, our engine was named the best among all Chrysler engines This a list of engines available on Chrysler models throughout the company's history. This list was adapted from allpar.com. 4 cylinder Chrysler engines
A gain in yield made by selling one bond and buying another. Also referred to as "yield pickup." Notes: When the present yield is relatively low compared to the longer-term yields, pickups will be done by investors trying to increase the yield and duration of their trucks, as recently reflected in a report released by J.D. Powers and Associates. Power Generation Sales in the Power Generation Business for the second quarter were $307 million, essentially flat with the second quarter of 2002. In North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , revenues were down 2 percent compared to a year ago, with continued weak demand in our commercial genset For the corporation, see Genset Corporation. A genset (short for "generator setup") is the term used for a self-contained and dedicated electrical generation system, usually portable or mounted on a vehicle such as a boat. business. Demand in our consumer business remained strong, with sales 2 percent higher than the second quarter of 2002. Outside North America, revenues increased 3 percent in total, with decreases in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and parts of Asia more than offset by increases in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. .
Filtration and Other Revenues for the Filtration and Other Business were $265 million for the quarter, a 9 percent increase compared to the second quarter of 2002. This marks a record sales quarter for the segment, despite continued weakness across most markets it serves. Fleetguard secured another long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. supply agreement in the quarter with CNH Global CNH Global N.V. (short for Case-New Holland; NYSE: CNH-ADR's) is the second largest manufacturer of agricultural equipment and the third largest maker of construction equipment in the world. N.V. and continues to pursue similar agreements with other major original equipment manufacturers. The segment also continues to benefit from the profitable growth of the Emission EMISSION, med. jur. The act by which any matter whatever is thrown from the body; thus it is usual to say, emission of urine, emission of semen, &c. 2. Solutions business. Emission Solutions continues to achieve growth targets, while funding technologies necessary to meet future emissions emissions npl → émissions fpl emissions npl → Emissionen pl requirements. International Distributor Sales for the International Distributor Business were $169 million in the second quarter, an increase of 17 percent compared to sales of $145 million last year, with improvement across most regions. The International Distributor Business continues to demonstrate its stable earnings capabilities. Earnings performance reached a record level in the second quarter. This business is increasing parts and service revenues and is benefiting from best-practice sharing across distributors. Guidance Cummins expects third quarter earnings in the range of $.60 to $.70 per share. Our earnings guidance for the year remains in the previous range of $1.20 to $1.40 per share. The Company's free cash flow for the year is still expected to be in the range of $70 to $80 million - sufficient to fund our dividend and provide for some modest debt reduction in 2003. Cummins expects capital expenditures for the year to be below $110 million. Restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. Update On April 14th, the Company announced that it would restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state prior period financial statements. This restatement required a re-audit of the 2000 and 2001 financial statements by the Company's new auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together , PricewaterhouseCoopers, LLP LLP - Lower Layer Protocol (PwC) since Arthur Andersen For the U.S. Supreme Court case commonly known as Arthur Andersen, see . Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms (the other four are PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG), performing , LLP was Cummins auditors for those periods and is no longer providing auditing services. The Company is pleased to announce that the re-audit and restatement work is substantially complete. Cummins is completing financial statements and disclosures and expects to file the Company's 2002 Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. as well as first and second quarter Form 10-Qs Form 10-Q See 10-Q. for 2003 in the near future. Until the Form 10-K is filed, the Company will not release comparisons with prior periods. Once Cummins files the 2002 Form 10-K, the Company will announce the date of its Annual Shareholders Meeting. Cummins Inc., a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Headquartered in Columbus, Indiana Columbus (IPA: [kəˈlʌm.bəs]) is the county seat of Bartholomew County, Indiana. The population was 39,059 at the 2000 census. The current mayor is Fred Armstrong. , (USA) Cummins serves its customers through more than 500 company-owned and independent distributor locations in 131 countries and territories. With 23,700 employees worldwide, Cummins reported sales of $5.9 billion in 2002. Press releases by fax can be requested by calling News On Demand (toll free) at 888-329-2305. The Cummins home page can be found at www.cummins.com. Information provided in this release that is not purely historical is considered to be forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including statements regarding the Company's expectations, hopes, beliefs and intentions on strategies regarding the future. It is important to note that the Company's actual future results could differ materially from those projected in such forward-looking statements because of a number of factors, including, but not limited to, general economic, business and financing conditions, labor relations, governmental action, competitor pricing activity, expense volatility and other risks detailed from time-to- time in Cummins Securities and Exchange Commission filings. Information in this press release includes certain non-GAAP financial measures. Such information is reconciled rec·on·cile v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles v.tr. 1. To reestablish a close relationship between. 2. To settle or resolve. 3. to what management believes is the most directly comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measures, contained in this release, which will be furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. on a Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. and may be accessed from the Cummins website at www.cummins.com.
Cummins Inc.
(Millions, except per share amounts)
Unaudited
FOR THE QUARTER ENDED
June 29, March 30, Year-to-Date
2003 2003 2003
Net sales $1,539 $1,387 $2,926
As reported
Earnings (loss) before interest
and income taxes 46 (14) 32
Net earnings (loss) 14 (34) (20)
Basic earnings (loss) per share $.34 $(.86) $(.52)
Diluted earnings (loss) per share .34 (.86) (.52)
Weighted-average number of shares
for EPS
Basic 39.0 38.9 39.0
Diluted 39.0 38.9 39.0
Cummins Inc.
Consolidated Statement of Earnings
Unaudited
Second First
Quarter Quarter Year-to-Date
Millions, except per share amounts 2003 2003 2003
Net sales $1,539 $1,387 $2,926
Cost of goods sold 1,263 1,173 2,436
Gross margin 276 214 490
Selling and administrative expenses 200 195 395
Research and engineering expenses 50 46 96
Joint ventures and alliances (income)
expense (17) (7) (24)
Interest expense 20 20 40
Other (income) expense, net (3) (6) (9)
Earnings (loss) before income taxes,
minority interest, dividends on
preferred securities of subsidiary
trust and cumulative effect of change
in accounting principle. 26 (34) (8)
Provision (benefit) for income taxes 5 (10) (5)
Minority interest 2 4 6
Dividends on preferred securities of
subsidiary trust 5 6 11
Net earnings (loss) $14 $(34) $(20)
Earnings Per Share
Basic $.34 $(.86) $(.52)
Diluted $.34 $(.86) $(.52)
Average number of shares:
Basic EPS 39.0 38.9 39.0
Diluted EPS 39.0 38.9 39.0
Cash dividends declared per share $.30 $.30 $.60
Cummins Inc.
Consolidated Statement of Cash Flows
Unaudited
Second Quarter
Ended
Millions June 29, 2003
Cash flows provided by (used in) operating activities
Net earnings $14
Adjustments to reconcile net earnings to net cash
from operating activities:
Depreciation and amortization 54
Equity in (income) losses of joint ventures and
alliances (13)
Minority interest 2
Translation and hedging activities 2
Changes in assets and liabilities:
Receivables (30)
Proceeds (repayments) from sale of receivables 5
Inventories (18)
Accounts payable and accrued expenses 25
Other (7)
Total adjustments 20
Net cash provided by operating activities 34
Cash flows provided by (used in) investing activities
Property, plant and equipment:
Capital expenditures (27)
Proceeds from disposals 2
Investments in and advances to joint ventures and
alliances 21
Purchases of marketable securities (26)
Proceeds from sale of marketable securities 37
Net cash provided by investing activities 7
Net cash provided by operating and investing activities 41
Cash flows provided by (used in) financing activities
Proceeds from borrowings 9
Payments on borrowings (8)
Net borrowings under short term credit agreements (29)
Dividend payments on common stock (13)
Other (9)
Net cash used in financing activities (50)
Effect of exchange rate changes on cash and cash
equivalents 2
Net change in cash and cash equivalents (7)
Cash and cash equivalents at the beginning of the
quarter 66
Cash and cash equivalents at the end of the quarter $59
Cummins Inc.
Segment Information
Unaudited
Power Filtration International Elimina-
Millions Engine Generation And Other Distributor tions Total
Second
Quarter
Ended
June 29,
2003
Net sales $889 $307 $265 $169 $(91) $1,539
Earnings
(loss)
before
interest
and
income
taxes 24 (15) 25 12 - 46
First
Quarter
Ended
March
30, 2003
Net sales $816 $267 $254 $136 $(86) $1,387
Earnings
(loss)
before
interest
and
income
taxes (23) (17) 20 6 - (14)
Year-to-
Date
Ended
June 29,
2003
Net sales $1,705 $574 $519 $305 $(177) $2,926
Earnings
(loss)
before
interest
and
income
taxes 1 (32) 45 18 - 32
Product Revenues as Percent of Total Sales
------------------------------------------
% of Consolidated Sales Q1 Q2 Q3 Q4 YTD
----------------------------------------------------------------------
2003:
----------------------------------------------------------------------
Engines 45 44 44
----------------------------------------------------------------------
Non-Engine Products 55 56 56
----------------------------------------------------------------------
2002:
----------------------------------------------------------------------
Engines 44 46 51 41 46
----------------------------------------------------------------------
Non-Engine Products 56 54 49 59 54
----------------------------------------------------------------------
Sales
-----
$Millions Q1 Q2 Q3 Q4 YTD
----------------------------------------------------------------------
2003:
----------------------------------------------------------------------
Engine Business
----------------------------------------------------------------------
Heavy-Duty Truck 236 266 502
----------------------------------------------------------------------
Medium Duty Truck+Bus 122 141 263
----------------------------------------------------------------------
Light Duty Auto+RV 222 228 450
----------------------------------------------------------------------
Industrial 236 254 490
----------------------------------------------------------------------
TOTAL ENGINE BUSINESS 816 889 1,705
----------------------------------------------------------------------
Power Generation 267 307 574
----------------------------------------------------------------------
Int'l. Distributors 136 169 305
----------------------------------------------------------------------
Filtration / Other 254 265 519
----------------------------------------------------------------------
Eliminations (86) (91) (177)
----------------------------------------------------------------------
TOTAL 1,387 1,539 2,926
----------------------------------------------------------------------
2002:
----------------------------------------------------------------------
Engine Business
----------------------------------------------------------------------
Heavy-Duty Truck 219 265 378 207 1,069
----------------------------------------------------------------------
Medium Duty Truck+Bus 138 157 191 113 599
----------------------------------------------------------------------
Light Duty Auto+RV 157 179 236 209 781
----------------------------------------------------------------------
Industrial 262 249 228 247 986
----------------------------------------------------------------------
TOTAL ENGINE BUSINESS 776 850 1,033 776 3,435
----------------------------------------------------------------------
Power Generation 283 304 315 324 1,226
----------------------------------------------------------------------
Int'l. Distributors 124 145 152 153 574
----------------------------------------------------------------------
Filtration / Other 228 243 236 244 951
----------------------------------------------------------------------
Eliminations (78) (84) (88) (83) (333)
----------------------------------------------------------------------
TOTAL 1,333 1,458 1,648 1,414 5,853
----------------------------------------------------------------------
Engine Shipments
----------------
Units Q1 Q2 Q3 Q4 YTD
----------------------------------------------------------------------
2003:
----------------------------------------------------------------------
Midrange 66,200 69,900 136,100
----------------------------------------------------------------------
Heavy-duty 10,700 12,800 23,500
----------------------------------------------------------------------
High Horsepower 1,900 2,000 3,900
----------------------------------------------------------------------
TOTAL 78,800 84,700 163,500
----------------------------------------------------------------------
2002:
----------------------------------------------------------------------
Midrange 60,500 67,000 71,800 65,800 265,100
----------------------------------------------------------------------
Heavy-duty 11,200 14,700 22,700 9,300 57,900
----------------------------------------------------------------------
High Horsepower 2,100 2,100 2,200 2,500 8,900
----------------------------------------------------------------------
TOTAL 73,800 83,800 96,700 77,600 331,900
----------------------------------------------------------------------
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